Women who paid ‘married women’s stamp’ could be owed thousands in basic state pension

Ladies, when was the last time you checked your basic state pension? It could be worth digging out the paperwork to see if you are owed any backdated cash.

If you are a married, divorced or widowed woman who was born before 6th April 1953 and paid a reduced rate of national insurance contributions during employment, then you could have been short-changed by a government blunder.

This issue only concerns women who retired before the new state pension system was introduced in April 2016, but it is still thought over 130,000 women in the UK could have been affected, costing the Department of Work and Pensions around £100million.

The mistake originates from an old-fashioned scheme from the 1940s whereby women paid less NI based on the assumption they were financially dependent on their breadwinner husbands.

The so-called married women’s stamp peaked in the mid-70s with 4.4million women paying the reduced rate. It was abolished in 1977 yet some women still continued to unknowingly pay the reduced rate. Around 200 women are still paying that same rate today.

Before 2016, to qualify for the full state pension you needed to have paid 30 years of national insurance if you retired between April 2010 and April 2016, or 38 years before that.

This meant women paying reduced stamp had built up little to no state pension by the time they retired. A rule was put in place to allow women to top up their pension when their husband reached 65 – the state pension age.

If the husband of a woman in this situation retired before 2008, she had to actively claim for 60 percent of her his basic pension entitlement. After 2008, she should have automatically received the boost, but a computer error meant this didn’t happen and thousands of women have been receiving less state pension than they’re entitled to.

That means if you currently receive less than £80.45 a week – which is 60 percent of the present full state pension – then you can make a claim for any monies owed to be backdated. If you are since divorced or widowed, you may even be able to claim the full state pension which is £134.25.

The DWP has already paid out £750,000, averaging around £10,000 per claimant, so it is worth double checking your own files to see if you are one of the women affected.

If you or your husband retired before 17th March 2008 when an active claim would have been needed, make a claim as soon as possible. Any monies owed can only be backdated for one year but future payments will be topped up the current level – this increases every April.

If retirement was after 17th March 2008, payment can be backdated up to that date which may result in a substantial amount of money owed to you.

Both you and your husband both need to check your annual state pension statements, specifically the bit listing the amount of basic state pension (not the total, as that may include payments such as the second state pension or pension credit). If you do not have this information, you can both contact the Pension Service and ask how much you are getting in basic state pension.

Times – and systems – have changed since the days of married women’s stamp but women nearing retirement age are still facing a disparity of savings compared to men. The amount of women contributing to NI is up 15 percent in 15 years, but the gender pay gap means men are still saving up to £78,000 extra for retirement through private pension schemes.

Just over half of women save enough for retirement, with lots of female groups still underprepared, such as lower and middle earners or female entrepreneurs.

While more women are in work compared to the 1940s, they tend to feel more financial pressure than male counterparts due to various factors such as lower incomes, working reduced hours, or a larger proportion of income going on essentials such as property and childcare costs.

If you are concerned about your retirement prospects, then get in touch with us. It is never too late to get your retirement plans on track.

Lee Maddock – Chartered Financial Planner

07912 392002 millbankfs.co.uk

Millbank Financial Solutions Limited is authorised and regulated by the Financial Conduct Authority